China

China Minting Millionaires in Global Wealth Surge

Visitors crowd around a luxury yacht on display during the 19th China International Boat Show in Shanghai on April 10

Where do the world’s rich live? As has long been true, the U.S. has more millionaires (in U.S. dollars) than any other country, with 7.1 million. But China last year came in second with 2.4 million millionaire households, beating Japan with half as many. The number of millionaire families around the world reached 16.3 million last year, up from 13.7 million the year before.

All told, the total value of global private wealth grew far faster than global economic output, up 14.6 percent, to $152 trillion, compared with an 8.6 percent increase in 2012. Much of the new money originated in the Asia-Pacific region (excluding Japan), up by 30.5 percent, to $37 trillion. That put Asia in the No. 3 spot for riches, behind North America and Europe, according to the 14th annual survey on private wealth by Boston Consulting Group.

Driven by rapid GDP growth in China and India, Asia is expected to surpass North America and Europe as the leading source of global wealth in 2018. That year, the global pot of gold will total a bit less than $200 trillion, with the proportion from Asia projected to reach $61 trillion, slightly more than North America, with $59.1 trillion. “The Asia-Pacific region and its new wealth will account for about half of the total growth,” the report predicts.

Most new wealth last year was created as stock markets worldwide rebounded. Wealth in equities in North America increased 29.1 percent and 48 percent in Asia. Growth of private wealth in China, up nearly 50 percent, had little to do with equities, as stock markets on the mainland sagged. Instead, money was made in the risky shadow-banking sector, including through such vehicles as trusts, the value of which surged 81.5 percent, the report notes.

Even as China mints new millionaires, the gap between rich and poor keeps growing and has now become one of the world’s highest. China’s Gini coefficient—a measure of inequality—has increased from 0.3 in 1980 to 0.55 in 2010 (a zero would represent perfect equality, and a score of one would mean all income is concentrated in the hands of a single individual), according to a survey, released in April, by the University of Michigan and a group of Chinese universities. A score over 0.4 can cause socially instability, the United Nations has warned.